Distribution Network Design with Distributors Advance Payment and Fuzzy Commitment

Abstract

This paper investigates the distribution network design problem in a two-echelon decentralized supply chain with a manufacturer and number of candidate distributors. A game theoretical approach is proposed for the problem while the objective of the chain members is to minimize the inventory costs and create stable network. Due to the disparity of power among chain members, manufacturers ask distributors to pay a fraction of the purchase cost in advance. On the other hand, distributors have a fuzzy commitment that affects the network stability. The Stackelberg equilibrium is developed for the problem and a methodology structure is proposed for decision-making on the network design alternatives, at the end the numerical example is presented for more explanation.